The Affordable Care Act and Part-Time Work

Jared Bernstein is a senior fellow at the Center on Budget and Policy Priorities in Washington and a former chief economist to Vice President Joseph R. Biden Jr.

Among the various attacks on the Affordable Care Act, one of the more coherent â€" a low bar, given what’s out there â€" is that it is causing small employers to create part-time jobs so as to remain under the 50 full-time worker cutoff for the employer mandate. The problem for those who want to come at the law from that angle, however, is that though the incentive exists, the evidence does not.

As Paul Van de Water and I pointed out in Politico the other day, if employers were responding to the incentive the way the critics claim, we should see involuntary part-time work growing as a share of total jobs, as workers who want full-time jobs would be stuck with part-time ones. But both involuntary and overall part-time work are slowly declining as a share of all jobs.

Still, it is legitimate to ask whether the slow decline in the share of part-timers is occurring more slowly in this recovery because of the incentive to stay under 50 full-timers. So I built a simple statistical model of the relationship between the share of involuntary part-time work and the unemployment rate. I then ran the model through the first half of 2009, and predicted, using the actual unemployment rate, the shares of involuntary part-time work.

Involuntary Part-Time Work: Actual and Predicted

Sources: Bureau of Labor Statistics, author’s analysis

If the law were keeping more than the usual number of full-time workers stuck in part-time jobs, then the predicted trend would be significantly below the actual one. In fact, the two trends hug each other quite tightly, further evidence that part-time employment is much where we would expect it to be at this stage of recovery, given the high level and slow decline in the jobless rate.

At the end of the day, no one’s saying the incentive does not exist or that it won’t show up somewhere down the road in the data. But there are good reasons to believe it will be small, and it’s not there yet.

Moreover, there’s no question that the United States needs to reform what has been an unsustainably wasteful health care delivery system, which both costs more than in other countries and covers a smaller share of the population. The Affordable Care Act already appears to be moving us in the right direction with few side effects. The smart move now is to implement it and keep a close watch out for consequences, both intended and otherwise.